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New Tax Law 2018: Test Your Tax Smarts

There's been plenty of hubbub about the tax overhaul that took effect in January 2018, but even after all that you've read and heard, do you really know how taxes are changing? Test your knowledge of the Tax Cuts and Jobs Act with our handy-dandy quiz. We dare you!

Quiz | New Tax Law 2018: Test Your Tax Smarts

Question 1 of 10

The standard deduction, which for 2017 returns is $6,350 for individuals and $12,700 for those who are married filing jointly, was bumped up significantly by the new tax law. For 2018, the standard deduction is:

Quiz | New Tax Law 2018: Test Your Tax Smarts

Question 1 of 10

The standard deduction, which for 2017 returns is $6,350 for individuals and $12,700 for those who are married filing jointly, was bumped up significantly by the new tax law. For 2018, the standard deduction is:

The 2018 standard deduction is $12,000 for individuals and $24,000 for those married filing jointly. That means that many fewer people will be itemizing going forward. Taxpayers 65 and get an even better deal. Those 65 and older or legally blind will each get to add either $1,300 (married) or $1,600... Read more ˅

The 2018 standard deduction is $12,000 for individuals and $24,000 for those married filing jointly. That means that many fewer people will be itemizing going forward. Taxpayers 65 and get an even better deal. Those 65 and older or legally blind will each get to add either $1,300 (married) or $1,600 (single) to the basic amount. For a married couple when both husband and wife are 65 or older, the 2018 standard deduction is $26,600. Less ˄

Quiz | New Tax Law 2018: Test Your Tax Smarts

Question 2 of 10

While the standard deduction has jumped, the advantage for some taxpayers is more than offset by the elimination of personal exemptions, which in 2017 were worth $4,050 each.

Quiz | New Tax Law 2018: Test Your Tax Smarts

Question 2 of 10

While the standard deduction has jumped, the advantage for some taxpayers is more than offset by the elimination of personal exemptions, which in 2017 were worth $4,050 each.

In the past, you could claim an exemption for yourself (and a spouse on a joint return) plus one for each dependent you claimed. Thus, a married couple with four children could claim six exemptions. But the new law eliminates exemptions altogether. Since exemptions were expected to be worth $4,150 i... Read more ˅

In the past, you could claim an exemption for yourself (and a spouse on a joint return) plus one for each dependent you claimed. Thus, a married couple with four children could claim six exemptions. But the new law eliminates exemptions altogether. Since exemptions were expected to be worth $4,150 in 2018, that would have protected $24,900 of their income, far more than the $12,000 boost in the standard deduction. Other changes in the law, such as doubling of the child credit to $2,000 for each qualifying child, and reduction of tax rates, will make up for some or all of the loss. Less ˄

Quiz | New Tax Law 2018: Test Your Tax Smarts

Question 3 of 10

People with the biggest mortgages will benefit from changes to mortgage interest deductions in the new tax law.

Quiz | New Tax Law 2018: Test Your Tax Smarts

Question 3 of 10

People with the biggest mortgages will benefit from changes to mortgage interest deductions in the new tax law.

Lawmakers reduced the amount of debt on which homeowners can deduct interest payments. The previous limit was $1 million. The new limit, which applies to loans made after Dec. 14, 2017, is $750,000. Older loans are still subject to the $1 million cap.

Quiz | New Tax Law 2018: Test Your Tax Smarts

Question 4 of 10

Capital gains rates — including the special 0% rate for some taxpayers — remain unchanged under the new tax law.

Quiz | New Tax Law 2018: Test Your Tax Smarts

Question 4 of 10

Capital gains rates — including the special 0% rate for some taxpayers — remain unchanged under the new tax law.

The rates for long-term gains, which are the profits from assets owned more than a year, remain the same as 2017: 0%, 15% or 20% (or 23.8% for taxpayers subject to the 3.8% net investment income tax). One thing that will be different is that your rate will be determined not by your tax bracket — a... Read more ˅

The rates for long-term gains, which are the profits from assets owned more than a year, remain the same as 2017: 0%, 15% or 20% (or 23.8% for taxpayers subject to the 3.8% net investment income tax). One thing that will be different is that your rate will be determined not by your tax bracket — as in the past — but by new income limits. For 2018, the 0% rate for long-term gains and qualified dividends will apply for individuals with taxable income under about $38,600 and about $77,200 for joint filers. The 20% rate applies to singles with taxable incomes exceeding $425,800 and marrieds with incomes over $479,000. The 15% rate applies for investors with incomes in between. Less ˄

Quiz | New Tax Law 2018: Test Your Tax Smarts

Question 5 of 10

Converting a traditional IRA into a Roth IRA won't be advantageous in 2018 for most taxpayers, but at least the new tax law still allows those who decide to execute a conversion to change their minds later.

Quiz | New Tax Law 2018: Test Your Tax Smarts

Question 5 of 10

Converting a traditional IRA into a Roth IRA won't be advantageous in 2018 for most taxpayers, but at least the new tax law still allows those who decide to execute a conversion to change their minds later.

Because tax rates, for the most part, are lower and tax brackets wider than in the past, the tax bill for converting funds from a traditional IRA to a Roth will be lower. However, the new law has taken away the chance to change your mind by "recharacterizing" a conversion by Oct. 15 of the followi... Read more ˅

Because tax rates, for the most part, are lower and tax brackets wider than in the past, the tax bill for converting funds from a traditional IRA to a Roth will be lower. However, the new law has taken away the chance to change your mind by "recharacterizing" a conversion by Oct. 15 of the following year. Starting in 2018, conversions are irreversible. Less ˄

Quiz | New Tax Law 2018: Test Your Tax Smarts

Question 6 of 10

Fact: The new law ends the ability of homeowners to deduct interest on home-equity lines of credit used to buy automobiles, for example, or pay down credit card debt. Going forward only if home equity debt is used to buy, build or substantially improve a main home or second home will the interest be deductible. True or False: Fortunately, you can still deduct interest paid on older home-equity debt incurred before the law changed, regardless of how the money was used.

Quiz | New Tax Law 2018: Test Your Tax Smarts

Question 6 of 10

Fact: The new law ends the ability of homeowners to deduct interest on home-equity lines of credit used to buy automobiles, for example, or pay down credit card debt. Going forward only if home equity debt is used to buy, build or substantially improve a main home or second home will the interest be deductible. True or False: Fortunately, you can still deduct interest paid on older home-equity debt incurred before the law changed, regardless of how the money was used.

Unlike the squeeze on deducting home mortgage debt, which applies only to debt incurred after Dec. 14, 2017, the new law ends the home-equity debt deduction immediately. And there's no “grandfather” clause to help people with existing lines of credit: The crackdown applies to old loans as well a... Read more ˅

Unlike the squeeze on deducting home mortgage debt, which applies only to debt incurred after Dec. 14, 2017, the new law ends the home-equity debt deduction immediately. And there's no “grandfather” clause to help people with existing lines of credit: The crackdown applies to old loans as well as new ones if the money is used for any purpose other than to buy, build or improve a principal or second home. Less ˄

Quiz | New Tax Law 2018: Test Your Tax Smarts

Question 7 of 10

Parents and grandparents saving for a child's K-12 private school have gained a powerful new option with the tax law changes. Such expenses can now be paid with funds from a state-sponsored 529 savings plan. How much 529 money can be used each year for a private or parochial elementary or high school student?

Quiz | New Tax Law 2018: Test Your Tax Smarts

Question 7 of 10

Parents and grandparents saving for a child's K-12 private school have gained a powerful new option with the tax law changes. Such expenses can now be paid with funds from a state-sponsored 529 savings plan. How much 529 money can be used each year for a private or parochial elementary or high school student?

Keep in mind that although contributions are not deductible at the federal level, most states offer residents a state tax break. Note also that some states need to change their rules to permit tax- and penalty-free withdrawals from 529 plans to pay pre-college expenses.

Quiz | New Tax Law 2018: Test Your Tax Smarts

Question 8 of 10

More taxpayers with big medical bills will be able to deduct them after the tax law changes, because the deduction threshold has been lowered. Unreimbursed expense in excess of which percentage of AGI can be deducted?

Quiz | New Tax Law 2018: Test Your Tax Smarts

Question 8 of 10

More taxpayers with big medical bills will be able to deduct them after the tax law changes, because the deduction threshold has been lowered. Unreimbursed expense in excess of which percentage of AGI can be deducted?

Before the change, the threshold was 10% of AGI. The more generous rule applies for 2017 and 2018. In 2019 the threshold climbs back to 10%.

Quiz | New Tax Law 2018: Test Your Tax Smarts

Question 9 of 10

Congress doubled the amount you can leave your heirs without having to pay estate taxes. The 40% federal estate tax applies only to estates in excess of:

Quiz | New Tax Law 2018: Test Your Tax Smarts

Question 9 of 10

Congress doubled the amount you can leave your heirs without having to pay estate taxes. The 40% federal estate tax applies only to estates in excess of:

This means a married couple theoretically could leave about $22 million tax-free. And these amounts will rise each year to keep up with inflation. But this tax change is currently slated to expire at the end of 2025, when the tax-free amount will revert to earlier levels.

Quiz | New Tax Law 2018: Test Your Tax Smarts

Question 10 of 10

The new tax law turns the taxation of alimony upside down. In the past, alimony payments were deductible by the ex-spouse who paid them and treated as taxable income by the recipient. Soon the reverse will be true.

Quiz | New Tax Law 2018: Test Your Tax Smarts

Question 10 of 10

The new tax law turns the taxation of alimony upside down. In the past, alimony payments were deductible by the ex-spouse who paid them and treated as taxable income by the recipient. Soon the reverse will be true.

Payors will no longer get to deduct alimony, but the payments will be tax-free for the recipients. This goes into effect with divorce and separation agreements executed or amended after Dec. 31, 2018. For couples who divorce in 2018 or earlier years, the old rules state in force: The payor can deduc... Read more ˅

Payors will no longer get to deduct alimony, but the payments will be tax-free for the recipients. This goes into effect with divorce and separation agreements executed or amended after Dec. 31, 2018. For couples who divorce in 2018 or earlier years, the old rules state in force: The payor can deduct alimony and the recipient must report it as taxable income. Less ˄